E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Formed Potentially Bullish Reversal Bottom on Friday

March E-mini NASDAQ-100 Index futures posted a dramatic closing price reversal bottom on Friday after touching its lowest level since November 30 earlier in the session. For those scoring at home, this means the recent sell-off has taken away three-month’s worth of gains, while turning the index lower for the year.

None-the-less, we have to respect the chart pattern because if confirmed, it could trigger the start of a minimum 2 to 3 day correction or a 50% to 61.8% correction of the entire break from 13900.50 to 12207.25.

On Friday, March E-mini NASDAQ-100 Index futures settled at 12663.75, up 208.75 or +1.65%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, the closing price reversal bottom suggests momentum may be getting ready to shift to the upside.

A trade through 12207.25 will negate the closing price reversal bottom, signaling a resumption of the downtrend.

A move through Friday’s high at 12797.00 will confirm the closing price reversal bottom, while a move through 13328.25 turns the main trend to up.

The main range is 10936.25 to 13900.50. Its 50% to 61.8% retracement zone at 12418.25 to 12068.50 stopped the selling on Friday at 12207.25.

The minor range is 13328.25 to 12207.25. Its 50% to 61.8% retracement zone at 12767.75 to 12900.00 is the first upside target area.

The short-term range is 13900.50 to 12207.25. Its retracement zone target is 13054.00 to 13253.75.

The minor and short-term retracement zone are very important to the longer-term structure of the market. Sellers could come in on a test of these areas in an effort to form a potentially bearish secondary lower top.

Short-Term Outlook

The closing price reversal bottom chart pattern indicates the direction of the index on Monday will be determined by trader reaction to 12797.00.

Bullish Scenario

A sustained move over 12797.00 will indicate the presence of buyers. The first target is the minor 50% level at 12767.75, followed by last year’s close at 12885.50 and the minor Fibonacci level at 12900.00.

Turning higher for the year and taking out 12900.00 will indicate the buying is getting stronger. If this move generates enough upside momentum then look for the rally to possibly extend into the short-term retracement zone at 13054.00.

Bearish Scenario

A sustained move under 12797.00 will signal the presence of sellers. This could trigger a retest of the main 50% level at 12418.25. This is followed by the closing price reversal bottom at 12207.25, followed by the main Fibonacci level at 12068.50.

Side Notes

Over the week-end, the U.S. Senate passed President Joe Biden’s Covid Relief Package. Although this has been in the news for weeks, we could see a bullish reaction on Monday. Furthermore, the price action on Friday suggests Treasury yields may have hit a short-term top. If this come off the highs strong then look for NASDAQ stocks to soar.

Additionally, it’s not too early to think about the Fed’s monetary policy decisions on March 17. With Powell’s speech out of the way and the bullish jobs data, there isn’t a lot to think about so traders could begin to take profits and square positions ahead of the FOMC meeting. This could trigger a short-covering rally in the NASDAQ.

For a look at all of today’s economic events, check out our economic calendar.